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Topic: Agency

A client of mine is always on the lookout for properties for sale. Although she is not ready to buy yet, she likes to see what options are out there for her, and she’s always checking out the available inventory.

Recently she was driving through a very desirable neighborhood and saw a higher-end home for sale. Curious, she checked the local listings on Realtor.com, Zillow.com, and the website of the Realtor advertised as the listing agent but did not see the listing. After several days of looking, she contacted me and asked about why a Realtor would not list a home online. She wanted to know more!

What my client saw was a home that is a “pocket listing.” This type of listing is pretty popular in extremely high-priced markets or celebrity neighborhoods. The idea is the listing Realtor will speak with other Realtors in the area about the property, and sell the home that way instead of publically listing it. For those who want to sell and have their private lives remain private, this may be the way to go. I said, “may be”.

According toCNN Money, pocket listings are becoming more common as the market is gearing more towards the seller in larger markets like Los Angeles and Manhattan. But as you’ll notice, we’re not LA or Manhattan. In some markets, I”ve heard of these being as much as 40% of the market!

If you are a celebrity, it might make sense to do a pocket listing, but in this area, not so much. Even in a seller’s market, why in the world would you want to be exclusive if you live in the New River Valley? Homes get snatched up pretty quickly if they are move-in ready. If someone wants a higher-end home, there are several listed on MLS that are easy for buyers to research before buying. (You can find your next home here.) Having it online allows the potential buyer to do research before making an appointment to see the home which leads to fewer looky-loos and more serious buyers. A quality Realtor will not take anyone other than someone who can afford the home into your exclusive home.

Additionally, there are some other potential problems with a pocket listing, namely dual agency. A pocket listing allows a Realtor to do dual agency, where both buyer and seller are represented by the same Realtor. Dual agency in and of itself isn’t illegal, but it serves to benefit no one but the agent (who pockets the full brokerage fee). As a seller, do you want to expose your home to the broad market, or just who your Realtor knows?

Although the pocket listing my client saw is located in one of the most desirable neighborhoods in town, as of today, it has been for sale at least a month. It’s competition has already sold, because buyers knew where to look.

Last week, I had asked on Twitter and Facebook “what’s the one thing you expect most from your real estate agent?” The responses varied in general, but one specific thing that came up was that people wanted their real estate agent to listen. A novel concept, really … we all want to be heard. Out of that question, someone on Twitter followed up by suggesting that when you have a contract with a listing agent, you can’t fire them, even when that agent isn’t listening.

@NRVLiving How can you fire someone with the contract? You either wait out the listing or have to stop looking, No?

I disagree. In fact, I tell every client that I work at their discretion, and if I’m not doing what they hired me to do, I should be fired. I’m not trying to get fired, mind you, but sometimes that’s just the way it goes. Think about it like this – when you’re hiring an agent, you’re deciding that you’re going to work with them for a few months. You’re going to “date” them for a while, and you need to make sure you’ve got a match.

Sometimes when a home is listed for sale, a seller will change their mind. Maybe their circumstances change and they don’t NEED to sell their home, or maybe they’ve just decided they don’t want to work with the agent they hired. In any case, if the house hasn’t sold and you’re listed with Jeremy Hart and NRVLiving Real Estate, we’ll allow you to cancel your listing agreement. We want you to be 100% satisfied with our work, and if we’ve promised you something and haven’t delivered on that promise, then shouldn’t you have the right to change your mind?

It really shouldn’t be more difficult than that. The Listing Agreement is just that, an agreement, but sometimes changes need to be made, and as a home seller you shouldn’t be made to feel that you have no options. The same goes for home buyers – just because you have a written agreement to work with a particular agent, if that agent keeps showing you split level homes even after you’ve told them 38 times that you didn’t want to see split level homes, then perhaps you need to look into canceling your agreement with them. I’m dense, but if it takes me 38 times to get the message then perhaps there’s no hope for me.

All of that being said, if you’re a home buyer or seller and have a property under contract, you need to contact an attorney before deciding whether to cancel the contract. Please note the emphasis – I’m not an attorney, nor do I play one on TV, but there are likely serious consequences for canceling a ratified contract, and you need to know what those are before doing continuing.

You have options as a home buyer or seller. Just because you signed an agreement to work with a particular agent, if you aren’t satisfied you shouldn’t be forced to keep dating. Be honest – say “this isn’t working for me, and I’d like to see other people.” It’s for the best, I promise.

I still don’t understand why articles in the Sunday New River Valley Current Real Estate section aren’t linked online, but I can write up the article here. Sarah Cox took the time to sit down and find out a little bit about what makes Nest Realty different from other real estate firms here in the area.

“An innovative approach to selling real estate”

Jonathan Kauffmann, who started Nest Realty in Charlottesville in August 2008 and hired his first agent in February of the following year, has opened a branch in Blacksburg, but is tightly holding onto the reins of fast growth. This is reflective of his business philosophy of doing what is best for the consumer, from the “For Sale” signs to the website.

“I have created a firm that does things a little differently,” he said.

Kauffmann talked about the signage being one of the top ways to attract attention, but not if the agent’s picture takes up most of the room.

“Is this the best way to use the sign? No,” he said.

Instead, Nest Realty focuses on the top objective: to get the house sold, said Kauffmann.

“We take pictures of the house, put it on the sign, and the sign becomes a billboard for the house,” he explained.

This is a similar approach to the one taken on the website. After being in business less than a year, Nest Realty was recognized by Inman News as the Most Innovative Brokerage for 2009.

“It was an amazing award for us to win. We were up against five other firms that have hundreds of offices and hundreds of millions of dollars in sales,” said Kauffman.

Another of the marked differences in Nest Realty is who and how many agents it employs. Currently, it has 20 full-time agents in Charlottesville and three in the New River Valley. They are Jeremy Hart, lately of Coldwell Banker Townside; Tina Merritt, with extensive investment real estate experience; and Aaron Harris, who has a property management and development background.

Sales last year in Charlottesville were about $45 million. This year, for Nest’s total sales, Kauffmann has set a goal of between $60 and $65 million.

Kauffman doesn’t advertise for agents. They come to him, he said.

“We go through a very strict training process. We require three years minimum of experience, references from past clients, multiple interviews, and make sure that they understand we have a customer-centric philosophy,” he explained.

Kauffman said that he looks for agents who understand the value of technology and how it can be used to provide service to clients. Hart, who has been in real estate for more than seven year, started his NRVLiving blog, which, he said, has developed a strong following.

“[Hart] is doing things the way that thousands of REALTORS across the country wish they could,” said Kauffmann. “He uses technology the right way.”

He described Merritt as “extremely dynamic” and pointed out the technology award she won in 2009 from the National Association of REALTORS, for which she has served on several committees.

Aaron Harris has a much different background in development and property management and is able to look at doing things from a different perspective, he said.

Kauffman said one of the major goals of his agency is to empower its clients. He posts monthly and quarterly market reports on the website because, he said, his clients tend to be knowledgeable and want to be involved in decisions. One of the reasons Inman awarded Nest Realty its award in 2009, said Kauffman, was that even though it is a small firm, its website has more than 50 high definition neighborhood videos.

Hart described Nest Realty as a “boutique real estate firm that specializes in residential and investment properties.” He found that it offers a different approach to sales, taking the spotlight off the agent and putting it on the client.

“We wouldn’t be in business if it weren’t for the people who buy and sell every day,” said Hart.

Nest Realty will not allow its agents to represent both buyers and sellers in the same transaction, something Hart said he completely supports.

“My license allows me to do that, but it’s not the right fit for the consumer. That is one of the core tenants that Nest is built on,” he said.

Kauffman, who has entrepreneurial and sales experience, and is a 1999 graduate of the University of Virginia, said he became interested in expanding his firm to the New River Valley because it shares with Charlottesville a number of similarities; the mountains and views, the university atmosphere, the education level of residents and a stable economy, he said.

“The New River Valley is the perfect next step for us,” he said.

Nest Realty’s website, www.nestrealtygroup.com, features a blog, The Nest Report. According to the site, it “is a platform to educate the public about the changing Charlottesville real estate market, including community news, industry updates, market reports, and all of the great things Charlottesville, Albemarle County and Central Virginia have to offer.” The New River Valley website will be up and running sometime toward the end of August. Kauffmann describes his firm on its website as being “a new breed of broker. We’re changing the face of real estate by empowering and educating our clients so they can make an informed decision to liver where they love. With Nest, it’s not about the transaction; it’s all about serving our clients.

Thanks Sarah, for the article – we’re glad to be bringing Nest to the area! For those of you into the visual thing, here’s a video from our Charlottesville office detailing some of the ways we’re changing real estate … be on the lookout for many of those to be here in the New River Valley very, very soon!

Over the last several days, including just three hours ago, I’ve talked with three sellers, and one buyer, about single agent dual agency and I won’t participate in it. I’ve said before that if an attorney can’t represent both sides, why can I? Then, I see this post on BlogByTheBay.com about the perils of dual agency.

Consider (bolding mine):

There are plenty of agents who are happy to represent both sides in a transaction since they earn twice the commission, but there are a number of us who refuse to “double end”, and for very good reasons. Real estate transactions are complicated, and can involve quite a bit of negotiation. No matter how ethical and competent you are it’s impossible to negotiate effectively with yourself. An agent’s job is to act as an advocate not a mediator, and there’s no way one person can simultaneously be an advocate for two sides with opposing interests.

Opposing interests. It’s no secret that a buyer wants to buy for as little as possible in the market environment, while a seller wants to sell for as MUCH as possible in the market. How can I represent opposing interests and help each side accomplish their goal?

I can’t, and I won’t. If that’s not what a buyer or seller wants, that’s okay … I can sleep at night knowing I did what was right for the transaction. I know that I have colleagues – many of them – who feel differently, and that’s fine as well. But to all of us, buyers, sellers, and agents – I hope we’ll choose to think carefully about whose interests are really being represented before entering into a dual agency relationship.

A few days ago I linked to a bit from The Dave Ramsey show, where Dave talks about why he’d use a real estate agent to sell real estate in spite of the fact that he might save a little money selling By Owner. As I thought more about it, I realized there were three reasons why I think he got it right.

But first a story.

I purchased a home, my first home, For Sale By Owner. My wife and I had been working with a great agent here in Blacksburg, and we found this home while walking through a neighborhood we really liked. We found out more, told Sam (our agent), and he did his best to provide us representation but the seller would have nothing of it. “If we wanted to buy the house, fine”, he said, but he wasn’t going to work with an agent. Sam offered the seller all sorts of possibilities because he knew how important it was that he be involved in this particular purchase, but time and again he was denied. After discussing it among Sam, Natalie and I, we decided to move on the purchase while Sam provided assistance in the background, and we eventually bought the house.

Did the seller get a good deal? Yes. Did Natalie and I get the house for a fair price? Knowing what we know now about the house, and with my current expertise regarding real estate in that neighborhood, no. Were we able to make it a great home? Of course, and I think in some ways we wish we’d never left it. But we also know that we could have avoided many of the problems we discovered in the home if we had pressed to use the expertise of our agent – if he’d been able to see the home, inside and out, we would’ve learned all sorts of things that might have impacted our decision of whether to purchase, and what price fair market value really was. But seriously, we loved the rodent dens we found, and the furnace leaking condensation into the carpet.

So Dave’s comment is important for three reasons, I think.

First, there’s no one who knows your home better than you; a REALTOR can’t have your expertise when it comes to the nuances of your particular home. I used to live in a neighborhood where I knew every single floorplan – the names, the room sizes, all of it – but no matter how well I knew that neighborhood inside and out, there were 144 homeowners that knew more than me. What I had knowledge of was the market in that neighborhood – what price the Baldwin plan could fetch at that time that another plan couldn’t, for instance. You put the homeowner’s expertise with my own, and we sold every house over there time and again.

Second, an active REALTOR (Dave references Pareto’s Principle) is going to not only have an active knowledge of the market where you are (and if they don’t, they should be referring you to someone who can assist you better) but they’re also going to have an active knowledge of what it’s going to take for a buyer to buy your home. Just because you think it’s a great price doesn’t mean we can get it, if buyers can’t qualify for funding, or you’re setting a new price point that can’t be appraised for the neighborhood. You want to be working with an agent who can demonstrate their expertise, not just boasts of it, and you certainly don’t want to be working with an agent who’s part-time – are you going to get part-time exposure?

Third, and probably most important to the majority of home sellers, is that selling For Sale By Owner does not always save money. Does it sometimes? Sure, the stars can align. Does it always? Not necessarily, and I hope to have more on this in several weeks if some things fall into place. The point is that you rely on a doctor for their expertise and understanding of current and appropriate medical care, always trying to choose one that has never been involved in any cauda equina syndrome claims or similar issues, you rely on your lawyer for aggressive and competent representation, but when it comes to selling a home don’t overlook the importance of an experienced, full-time REALTOR.

Don’t take my word for it, take Dave’s. And if you’re fond of rodent dens, then be my guest. 🙂

Dave Ramsey, the guru of getting out of debt, talks a lot on his show about ways to avoid paying unnecessary fees and penalties, and encourages people to save far more than they spend – novel concept, right?

He had a question on his show in October, that a couple of people who listen regularly heard and sent me a link. The question had to deal with whether or not to use a real estate agent to sell a home. Economically, that makes sense – a $200000 home with no mortgage is going to net the owner ~ $200000 (minus closing costs, of course), while that same house will net the owner less if they use a real estate agent. Dave’s take? You get what you pay for (5 minute listen):

It sat in my browser for a few days, and then I went back to it and read it again. This paragraph in particular struck me:

Let’s face it, in some states it is easier to become a real estate agent than it is to become a hair dresser. Most real estate company’s hiring requirements only consist of a pulse and a real estate license. Continuing education requirements, while they mean well, do not provide the real education an agent should have. Electricians, plumbers….they are required to be a student of their trade for years before being permitted to venture out on their own. Where is the accountability in the real estate industry? Where is the education in the trade?

This idea of a low barrier to entry in real estate has been thrown around for a long time. There are many that say it’s too easy to be a real estate agent, and that we lack the proper training. I happen to agree – I knew absolutely nothing of substance about real estate when I first got my license, and yet the Commonwealth of Virginia saw fit to grant me a license. It wasn’t until I got out into the field and started working with people, started seeing homes, started making some mistakes, that I really began to hone my craft. Getting the license was just like being accepted to college – each and every day since I’ve been in the classroom. Sometimes I pass, and sometimes I fail, but every day I should be learning.

Personally, I don’t think this idea of an evolving real estate industry is going to move so drastically in the direction of salary and benefits (although I’ve heard of some brokerages trying it); I believe in the idea of uncapped earnings because it seems to open up so much more creativity and determination, in my opinion. I do see things changing to be even less about the brokerage, or the agent, and more about the consumer. In the end, isn’t that what it’s all about anyway? What do you think?

There's a frequent topic in the real estate world, and it involves
who represents who in the transaction. There are some real positives
to understanding who your agent is working for; sometimes you might be
surprised at the answer. Here's a breakdown of Agency in VA, particularly if you're looking for an agent in the Blacksburg/Christiansburg/Radford area:

Seller's Agent
– The Seller's agent works for, and is representing, the seller only.
Most of the time this is the listing agent, but there are times (called subagency), when when it's not just the listing agent. More on this next.

Subagent – with subagency, the agent may be working with a buyer, but they still represent the seller. When an agreement is not in writing between buyer and agent, subagency exists.

Buyer's Agent – buyer has agreed, in writing, for an agent to represent them in the transaction. Buyer's agent has a responsibility to protect the client's interests, and is prevented from sharing confidential information with the other parties to the transaction.

Dual Agent – one agent, two parties (a buyer and a seller). This is not a good position to be in, not only if you are the buyer or the seller, but also the agent. As an agent, your role as an adviser and negotiator is eliminated, and you can provide little more than the facilitation of paperwork back and forth between both parties, and the scheduling of inspections, etc.

These are the main roles an agent can play in a real estate transaction in VA. Although all are legal within the Commonwealth, I will not practice dual agency. It's just my personal opinion that if a seller hires me to represent them in the sale of their home, then I can't adequately represent the buyer in that same sale. Likewise, if I'm working with buyer to find them a home, I can't provide them the advice they need to negotiate and purchase one of my listings. I don't like to do that – I want to give you my 100% full representation, and I'll foregoe a little extra money to do that.

It's interesting – I was with an attorney recently and I listened as he took a call and explained that he couldn't advise the caller in that matter because he was advising one of the two sides of an upcoming case. If an attorney can't do that, I don't think it should be right for me to do that, either.

There's a frequent topic in the real estate world, and it involves
who represents who in the transaction. There are some real positives
to understanding who your agent is working for; sometimes you might be
surprised at the answer. Here's a breakdown of Agency in VA, particularly if you're looking for an agent in the Blacksburg/Christiansburg/Radford area:

Seller's Agent
– The Seller's agent works for, and is representing, the seller only.
Most of the time this is the listing agent, but there are times (called subagency), when when it's not just the listing agent. More on this next.

Subagent – with subagency, the agent may be working with a buyer, but they still represent the seller. When an agreement is not in writing between buyer and agent, subagency exists.

Buyer's Agent – buyer has agreed, in writing, for an agent to represent them in the transaction. Buyer's agent has a responsibility to protect the client's interests, and is prevented from sharing confidential information with the other parties to the transaction.

Dual Agent – one agent, two parties (a buyer and a seller). This is not a good position to be in, not only if you are the buyer or the seller, but also the agent. As an agent, your role as an adviser and negotiator is eliminated, and you can provide little more than the facilitation of paperwork back and forth between both parties, and the scheduling of inspections, etc.

These are the main roles an agent can play in a real estate transaction in VA. Although all are legal within the Commonwealth, I will not practice dual agency. It's just my personal opinion that if a seller hires me to represent them in the sale of their home, then I can't adequately represent the buyer in that same sale. Likewise, if I'm working with buyer to find them a home, I can't provide them the advice they need to negotiate and purchase one of my listings. I don't like to do that – I want to give you my 100% full representation, and I'll foregoe a little extra money to do that.

It's interesting – I was with an attorney recently and I listened as he took a call and explained that he couldn't advise the caller in that matter because he was advising one of the two sides of an upcoming case. If an attorney can't do that, I don't think it should be right for me to do that, either.

Although a lot of real estate brokerages discount the services of Northwest-based Redfin, they put out a list of "15 Questions To Ask When Hiring A Real Estate Agent" a couple of weeks ago that I thought were pretty good. It's not a perfect list, but it's agood start.

As agents we're often interviewed when competing for listings, but rarely have I been interviewed by buyers (although the first time it happened, I was impressed). Why shouldn't we be interviewed? Have you interviewed agents before?

The data relating to real estate on this website comes in part from the Broker Reciprocity/IDX (Internet Data Exchange) Program of the New River Valley Multiple Listing Service, Inc. Real estate listings held by brokerage firms other than Nest Realty are marked with the Broker Reciprocity logo (IDX) and detailed information about them includes the name of the broker.